Serial ‘beerpreneur’ launches new keg rental business

Adam Trippe-Smith, the founder of Kegstar, has launched a competitor to his former company, Konvoy.

Trippe-Smith said he and his team had founded the scan-free keg rental company with the aim of becoming a major player in the market.

Trippe-Smith said that after three years at the helm of Kegstar following its acquisition in full by Brambles in 2015, he took some time out to spend with his family and to reassess his plans, which led to the formation of Konvoy.

“I really enjoyed helping the brewing industry grow, helping the breweries run better and freeing up capital,” he said.

“When you start with a blank sheet of paper you can always do something better. So long story short, that’s what I decided to do.”

Starting on his own earlier this year, (his non-compete clause in his Kegstar contract reportedly running out in 2017) Konvoy soon attracted some familiar faces.

Three former Kegstar employees have now moved into Konvoy’s offices in Darlinghurst; sales director Nick Becker, commercial director Patrick Hanrahan and Marc Eggins, operations director.

“Those three were the longest-serving team members remaining at Kegstar. They were assessing their options and one by one they decided to break ties and come across, and that was the start of getting the band back together, as they say,” explained Trippe-Smith.

Konvoy may have started on a piece of paper, but there have been some important improvements to his original idea for a keg leasing business.

“We looked at what we can improve based on what we already know, and at the same time the technology we wanted had come down in price. What I wanted to do with technology tracking in 2011 which I couldn’t do due to costs, I can do now.”

He said Konvoy had some significant points of difference, and not just its lean company structure in comparison to its competitors at home and worldwide.

“With pricing, the alternative in the market is a fixed and variable price so ultimately you don’t know what your end cost is going to be.

“From a tracking point of view, with alternatives in the market, if it is tracked at all, it’s usually tracked through either a hand scan from a smartphone or a RFID gun. The problem with that is that it relies on humans, and humans are not 100 per cent perfect.”

He said Konvoy’s proprietary technology would work to solve these human error issues.

“With the technology we’re having developed and put on the kegs, we’re removing the requirement for customers to scan kegs. Effectively we’re taking responsibility for tracking kegs through the supply chain off of the customer and putting it back on us.

“It takes a huge amount of stress and uncertainty outside the keg supply chain,” he said.

Tracking technology

Konvoy has invested heavily in the technology.

“By us being responsible for watching the keg and getting it back we obviously need a tracking device that will be on the keg that tells us where it is.

“[Our tracking] is a combination of different technologies, some of them proprietary, but it will include Bluetooth, Wifi and, to some extent, GPS, but it’s not a GPS device.”

Brewers have raised concerns about the efficiency of a scan-free system when kegs enter ‘dark’ areas of the supply chain like cold rooms, but Trippe-Smith said this was an issue the Konvoy team had been working on.

“Our device, when it moves and is under certain conditions will ping certain readers and give us a location for that, definitely when it’s on a truck, or moving around in a storage shed.

“There’s always going to be a point where the keg is not visible, but if it’s talking to Wifi, Bluetooth, GPS, outside of a brewery, we’ll know it’s there. Then it will become visible again.”

Kegs have already been distributed to Australian breweries including Akasha, Burnley Brewing, Moon Dog Craft Brewery, Mismatch, Wolf of the Willows and more, along with New Zealand-based Parrotdog.

Konvoy’s first batch of kegs will be retrofitted with the beacon, as there is still industrial design work being completed on fitting them, Trippe-Smith explained.

“We’re about to be putting out kegs with beta devices and then finessing the beacon itself and then going into commercial production.

“We will be installing the beacons, which are being made for us offshore in Asia, in kegs in Q1 next year, with a view to having every keg we have delivered from Q2 onwards fitted with our proprietary beacon.

“The technology isn’t untested, we’ve been testing consumer devices, a consumer version of the same technology, tracking those beacons as they go around and that was the catalyst on pushing the button as that all worked fine.

“Now we’re taking that technology and building it into an industrial casing that can be welded on top of a keg.”

At this point it is an industrial design project rather than a technology issue, as a case is being designed for the beacons that will withstand the life of a keg, through dirt, shock, high water pressure and steam, he said.

Konvoy’s first load is 35,000 kegs, said Trippe-Smith, a major step up from the 880 kegs that Kegstar owned when it was launched, and more even than when Brambles took it over (2,500), but the industry has moved on considerably since then, he said.

“We’re certainly starting a bit bigger this time, and we’re building new software as well, including a Konvoy portal for tracking the kegs, reporting, ordering and managing the whole fleet.

“We had the knowledge of what we wanted to do and we have a partner working exclusively with us on delivering, designing and supplying this beacon.”

From an investment point of view, Trippe-Smith’s former Kegstar collaborator Shane Bradley is back on board providing investment, and the company will be looking further into their fundraising capabilities in the coming year.

“We have big growth plan for the business and in the new year we will also be raising capital to fund the growth of the business.

“The response to Konvoy has been extremely good so far and ultimately our goal is to have a material share of the Australia and and New Zealand keg rental market,” Trippe-Smith said.

Leading up to Konvoy

While not a brewer himself, Trippe-Smith founded McLaren Vale Beer Co in 2008, and sold the business in 2011. He was also one of the seven founding board members of the organisation now best known as the IBA.

“I had a quick four-year immersion into brewing and the world of beer, and along the way I’d obviously had exposure to kegs.”

It was this experience at the helm of Vale that gave him the idea for Kegstar.

“I paused in 2012 before I rushed into doing a new brewery, and basically decided that I was going to try and solve the keg dilemmas of the beer industry and particularly the craft side of it, because everyone was growing so quickly they were always running out of kegs,” he said.

“My barrier to growth at Vale was running out of kegs. In the early days we were contract brewing so we had access to capacity and raised capital so we had money in the bank, but we kept running out of kegs.

“The only way to do it back then was to buy disposable plastic kegs by the pallet, or buy a container of steel kegs from Europe, which cost about $100,000.”

Using the US model as a guide, he said he thought he’d “take a crack” at incubating a keg leasing business at home, a model which was virtually unknown at the time, he said.

“A shipment of kegs from the US landed in November, and I emailed every brewer in the country that I knew. Stone & Wood were our first customer, they took half of what we had.

“The first kegs landed there on the 12th December and that was the start of it. It was the right business at the right time and it just took off.”

In 2015 he moved to the UK temporarily to launch Kegstar in the northern hemisphere, and by that point Brambles had set its eyes on the full ownership of the company.

“Part of the original deal when Brambles came on was that they had the option to go to 100 per cent [ownership].

“A big player coming into a small business in a new segment, obviously they had better leverage and that was one of the key criteria for them.”

Trippe-Smith said he was “dead against” Brambles taking on full ownership when it was suggested later that year.

“I was trying to convince them to go to 75 or 80 per cent so we could stay as effectively a joint venture and private/independent not part of a big group, but clearly I lost that fight.

“My preference was for that not to happen and stay at kind of 70-75 per cent to them and the rest to us, but it’s history now.”

Trippe-Smith stayed on another three years at the business and his last day was in October 2018.

“The last two and a half years were challenging,” he said, as the change of culture in the business was a difficult one to manoeuvre.

“A fast-growing, entrepreneurial, lean beverage industry supplier within a global behemoth is a difficult mix. Every business school in the world would say that’s a common issue.

“A high growth business like that within a big corporate is in some ways left to the side and generally flourishes, but once it gets integrated it gets more difficult.

“I always said I was going to leave when I didn’t enjoy it anymore, and it got to that point, because it was harder to get approvals, it’s a global corporation with different operation procedures.”

He took the summer off to spend time with his family and think about his next move.

“I didn’t think seriously about Konvoy until this year, when I was coming out of holiday mode.

“Keg rentals was always going to be a two-player market and there was at one point, Kegstar and Keg Lease, which operated on a different kind of model.

“It was highly likely in a growing market for breweries there would be another keg renting player and I know a couple of US players were looking at Australia. I also knew my old team at Kegstar were getting restless.

“I wanted to remain and active player in the Australian and New Zealand beverage scene and it just became a question of how I do that.”